bpcl: BPCL issues $120 mn tender offer to reduce debt

State-run Bharat Petroleum Corporation Ltd (BPCL) has announced a tender offer to reduce lumpy debt refinancing pressure in 2027.
The tender offer is for up to $120 million at a minimum tender price of 98.2 cents for $600 million, 4.375% Jan-2027 bond.

In a report, CreditSights, a Fitch Group company said, it views the tender offer as good liability management that would help reduce lumpy debt refinancing pressure in 2027 and unfavorable exposure to $/IDR depreciation.

“We remain comfortable with BPCL’s strong majority state ownership, robust banking relations, and sound credit fundamentals and expect BPCL to repay the bond upon maturity,” said CreditSights, adding that it expects BPCL’s credit outlook to improve in FY24 due to moderating input oil prices and resilient domestic fuel demand, though we also expect its FY25 credit outlook to deteriorate subsequently due to the decline in its EBITDA and capex plans.

BPCL plans to spend Rs 1.5 lakh crore over the next five years, on strengthening its gas, non-fuel retailing, petrochemicals, and green business. The company plans to invest Rs 1000 crore to set up two 50-megawatt captive wind power plants in Maharashtra and Madhya Pradesh. It is also setting up a green hydrogen plant at Bina Refinery to meet its hydrogen requirements. Additionally, it plans to provide electrical vehicle charging facilities at 7000 fuel stations over the next five years.

CreditSights said it remains watchful of BPCL’s sizeable capex plans amid its energy transition projects, which could strain its credit profile and free cash flows.

“We expect BPCL’s FY25 revenue to see a 5-10% year-on-year improvement on the back of resilient domestic refined fuel demand, though partially negated by flattish oil and gas price realizations. On the other hand, we expect BPCL’s EBITDA to decline YoY due to higher crude oil input costs.”

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